Authorize a temporary interfund loan not to exceed $50 million from the Portland Parks & Recreation System Development Charge Fund to the Fire and Police Disability and Retirement Fund to provide interim financing for fiscal year 2025-26 cash flow deficit due to the timing of property tax collections
The City of Portland ordains.
Section 1. The Council finds:
- The Fire and Police Disability and Retirement (“FPDR”) Fund of the City of Portland (the “City”) will experience a cumulative cash flow deficit during fiscal year 2025-26 due to the timing of current year property tax collections.
- The FPDR Fund expects monthly deficits to occur prior to receipt of the majority of property taxes in November and December 2025, and resources are needed to pay for planned expenditures until that time.
- The FPDR Fund cash flow deficit has historically been addressed by issuing short-term tax anticipation notes through the public municipal bond market, borrowing directly from a bank, or borrowing from another City fund.
- The City Debt Management office estimates that an interfund loan will present the least risk and provide the lowest cost financing for FPDR for fiscal year 2025-26.
- Per local budget law (ORS 294.468), the City may loan money from one fund to another for operating purposes for up to one fiscal year.
- The City’s Comprehensive Financial Management Policies, specifically FIN 2.18, allow for interfund lending as an alternative to bank loans or public debt issuance when bureaus require funding, and when sufficient legally available balances exist in other funds which can be loaned without impacting the lending bureau’s operations.
- The FPDR Board of Trustees approved Resolution No. 559 on May 27, 2025, authorizing the FPDR Fund to borrow up to $50,000,000 from another City fund available by law in fiscal year 2025-26.
- Portland Parks and Recreation (“Parks”) has sufficient revenue in its System Development Charge (“SDC”) Fund to lend monies to the FPDR Fund temporarily until sufficient property taxes are received. Loaned SDC funds will be repaid in full with interest no later than January 31, 2026, the maturity date of the loan.
- The City’s fiscal year 2025-26 budget includes approximately $229.9 million of ad valorem taxes to be received by the FPDR Fund in fiscal year 2025-26, which will cover all planned fund expenditures as well as the costs of a cash flow borrowing.
NOW, THEREFORE, the Council directs:
- The City hereby authorizes a temporary interfund loan in an aggregate principal amount of no more than $50,000,000 from the Parks SDC Fund to the FPDR Fund to finance the deficit in the FPDR Fund, in anticipation of the receipt of revenues from the FPDR property tax levy for fiscal year 2025-26, and in accordance with City financial policy FIN 2.18 and the terms shown in Exhibit A.
Official Record (Efiles)
An ordinance when passed by the Council shall be signed by the Auditor. It shall be carefully filed and preserved
in the custody of the Auditor (City Charter Chapter 2 Article 1 Section 2-122)
Passed by Council
Auditor of the City of Portland
Simone Rede
Impact Statement
Purpose of Proposed Legislation and Background Information
The ordinance authorizes a temporary interfund loan from the System Development Charge subfund (“Parks SDC Subfund”) of the Parks Capital Improvement Program Fund to the Fire and Police Disability and Retirement (“FPDR”) Fund to finance the cash flow deficit until current year property tax revenues for fiscal 2025-26 are received. The loan authorized by the Ordinance may not exceed $50,000,000.
The FPDR Fund will experience a cumulative cash flow deficit during the first half of fiscal year 2025-26 due to the timing of current-year collections of property taxes relative to ongoing monthly expenditures related to benefit payments. The FPDR Fund expects monthly deficits to occur prior to receipt of property taxes in November 2025 and resources are needed to pay for planned expenditures until that time.
The FPDR Fund cash flow deficit has historically been addressed by issuing tax anticipation notes in the public municipal bond market or by borrowing directly from a commercial bank; however, costs of these approaches have risen and an interfund loan will provide a lower cost of finance and provide operational efficiency. Portland Parks and Recreation (“Parks”) has sufficient resources in the Parks SDC Subfund to lend funds to the FPDR Fund temporarily until sufficient property taxes are received by the FPDR Fund.
Financial and Budgetary Impacts
Financial Impact: The FPDR Fund will repay the loan with interest no later than January 31, 2026. The interest rate will be equal to the City’s investment portfolio monthly average yield plus 10 basis points (0.10%). The loan may be prepaid in whole or in part at any time. Prepayments will be applied first to accrued interest on unpaid principal and then to principal.
Budgetary Impact: The interfund loan has already been budgeted within the Council Approved Budget.
Economic and Real Estate Development Impacts
This is an administrative action to provide a temporary loan and is not expected to have economic and real estate impacts.
Community Impacts and Community Involvement
This is an administrative action to provide a temporary loan. No direct community impact or involvement is anticipated.
100% Renewable Goal
Not applicable.
Economic and Real Estate Development Analysis
Analysis provided by Prosper Portland
An Economic and Real Estate Development Impact Analysis was not submitted for this proposed action. Pursuant to City Council Resolution 37664, Prosper Portland staff has reviewed the action and agree that it does not require an Economic and Real Estate Development Impact Analysis.
Document History
Document number: 2025-242
President's referral: City Council